Endogenous debt crises
We distinguish two types of debt crises: those that are the outcome of exogenous shocks (to productivity growth for instance) and those that are endogenously created, either by self-fulfilling panic in financial markets or by the reckless behavior of "Panglossian" borrowers. After Krugman, we characterize as "Panglossian" those borrowers who only focus on their best growth prospects, anticipating to default on their debt if hit by an adverse shock, rationally ignoring the risk of default. We apply these categories empirically to the data. We show that, taken together, endogenous crises are powerful explanations of debt crises, more important for instance than the sheer effect of growth on a country's solvency.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
|Date of creation:||Feb 2011|
|Contact details of provider:|| Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.|
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
|Order Information:|| Email: |
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dany Jaimovich & Ugo Panizza & Camil F.S. Campos, 2006.
"The Unexplained Part of Public Debt,"
IDB Publications (Working Papers)
6705, Inter-American Development Bank.
- Beetsma, Roel & Mavromatis, Konstantinos, 2012.
"An Analysis of Eurobonds,"
CEPR Discussion Papers
9244, C.E.P.R. Discussion Papers.
- R. Gaston Gelos, Ratna Sahay and Guido Sandleris, 2008.
"Sovereign Borrowing by Developing Countries: What Determines Market Access?,"
Business School Working Papers
2008-02, Universidad Torcuato Di Tella.
- Gelos, R. Gaston & Sahay, Ratna & Sandleris, Guido, 2011. "Sovereign borrowing by developing countries: What determines market access?," Journal of International Economics, Elsevier, vol. 83(2), pages 243-254, March.
- R. G Gelos & Guido M Sandleris & Ratna Sahay, 2004. "Sovereign Borrowing by Developing Countries; What Determines Market Access?," IMF Working Papers 04/221, International Monetary Fund.
- Chamon, Marcos, 2007.
"Can debt crises be self-fulfilling?,"
Journal of Development Economics,
Elsevier, vol. 82(1), pages 234-244, January.
- World Bank, 2006. "World Development Indicators 2006," World Bank Publications, The World Bank, number 8151.
- Aart Kraay & Vikram Nehru, 2006.
"When Is External Debt Sustainable?,"
World Bank Economic Review,
World Bank Group, vol. 20(3), pages 341-365.
When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:8270. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.